# Tuesday, 06 September 2011

Back in January, I argued that AppStores are not necessary as mobile economics mature and start to mimic web economics. Why do I need to download Skype from the AppStore when I can just go to Skype.com and do the same?


Apple changed the rules and suddenly the AppStore looks like it may die a toddler. Back in February, new rules for advertising revenue and media content were implemented by Apple. If your app is in the app store and you generate revenue from a new customer, you have to give Apple 30% of the revenue of everything you sell.  As per Steve Jobs:

"Our philosophy is simple -- when Apple brings a new subscriber to the app, Apple earns a 30% share... When the publisher brings an existing or new subscriber to the app, the publisher keeps 100% and Apple earns nothing."

Talk about a finders fee! Take the Kindle for example. If a new customer downloads the Kindle on the iPad and buys a book for $10, Apples gets $3 from Amazon, killing its margins. The same for the New York Times, Economist, Financial Times, and other magazines. What particularly vexed those publications is that Apple would tell the publisher absolutely nothing about the subscriber (Apple owns that data!), reducing any ability to personalize marketing to their own subscribers!

Content Producers Strike Back

The content producers started to fight back. Amazon was the first to strike with its web based Kindle Cloud Reader. It is a web application that uses web standards (HTML5) to allow users to read (online or offline!) their books. You can install a link on your iPad home screen making it look like an app, but it is not. It is just a web site and you completely bypass the AppStore, allowing Amazon to keep 100% of the revenue and customer data.

Another popular content producer struck an even deeper blow to the AppStore. The Financial Times, the winner of the Apple Design Award in 2010, has done the same as Amazon and released a cloud based version of their popular iPad app. Then in a move that can only be described as insurrection, the Financial Times has pulled its (award winning!) iPad and iPhone apps altogether from the AppStore!

With such moves by industry leaders Amazon and the Financial Times, the floodgates are open for others to follow. Apple can’t block the web in its devices, so it is the end of the AppStore as we know it. Even if Apple comes back and says, “ok ok, we will only take 3%, not 30%”, why would Amazon give Apple 3% when it can keep 100% for itself? Tasting freedom, publishers will never come back.

It was nice knowing you AppStore. RIP.

Tuesday, 06 September 2011 06:58:26 (Eastern Daylight Time, UTC-04:00)
The AppStore Business Model is Dead is a bold statement. If every publisher (content producer, app maker, ...) choose to avoid AppStore and go with web/cloud solution, then this would mean also end of native (mobile) apps, right? And this is simply not gonna happen in short time (as you argued in one of your's previous posts)...

-- s.
Slavo Furman
Tuesday, 06 September 2011 08:19:55 (Eastern Daylight Time, UTC-04:00)
@Slavo-why can't you distribute a native app via your web page? Meaning why can't Skype just download and install from Skype.com and not the AppStore?
Stephen Forte
Tuesday, 06 September 2011 13:26:21 (Eastern Daylight Time, UTC-04:00)
If you look at this solely from the vendor / store owner point of view, it could *appear* to be dying. But if we put the users back in the equation (as they should be the MAIN part of the equation), I think it is far too important to be able to provide a single, trusted location where the general public can purchase apps and app-related add-ons.

The AppStore (and app stores in general) are far from perfect. But this practice is still in its infancy. Yeah, you can go to Skype.com (or Microsoft.com) and download Skype -- but that's fine for you and I. I know way too many "regular folk" who are far too confused, or far too trusting, to safely navigate thousands of totally different websites to purchase / download / install apps for their devices (mobile / desktop / etc.). The world *needs* a good app store implementation. There are a lot of kinks to iron out (some portions and practices needing a complete overhaul), and the examples you've provided are key issues, not to mention proper and fair marketing rotation, etc. But to consider it dead at this point is *very* premature.
Wednesday, 07 September 2011 14:55:24 (Eastern Daylight Time, UTC-04:00)
Not sure how you can point to two data points and commit the whole business model to the graveyard. App Stores provide a way of extending your device, they work offline, provide a trusted source of applications and leverage device OS features (like identity, licensing etc). They also use less bandwidth than their web app equivalents, so the operating expenses are also against the web model.

In fact, i would say the opposite. That apps will become the primary way people interact with the internet. The whole notion of entering a URL will be seen like a techie feature in a few years. Just because Apple tries to pull a money making stunt - don't start drawing trend lines. If people back off of using the apps, Apple will just reverse course.
Thursday, 08 September 2011 08:57:07 (Eastern Daylight Time, UTC-04:00)
I agree with the article. The AppStore is the modern equivalent of AOL's old restricted homepage. As such, I think it has the same future.
I just fear what will happen when the shareholders realize it!
Gordon Freeman
Thursday, 08 September 2011 21:16:41 (Eastern Daylight Time, UTC-04:00)
I disagree. The benefits of the App Store (i.e. the Apple App Store) are that it is a curated environment and therefore people can buy from a trusted source without the danger of contracting spyware, malware or adware. The existing desktop software distribution model plus the Android Marketplace show the downside of a fully open market.
Monday, 12 September 2011 03:23:05 (Eastern Daylight Time, UTC-04:00)
These days everything is dead for you. "Silverlight is dead", "XAML is dead", now the AppStore is dead. I read your blog very often and I think that some your last posts are too radical. You assume that the AppStore will die because of the competitors behaviour and market share challenges. I think this point of view does't cover all the aspects of the matter, it is shallow and it doesn't indicate the consumer's attitude towards the AppStore.
Tosho Toshev
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